ERC hears Bukidnon electric coops’ bid to buy transmission lines

MARAMAG, Bukidnon (Bukidnon News/20 November) The Energy Regulatory
Commission (ERC) has started the hearings last week on the application
by a consortium of the province’s two electric cooperatives to buy
sub-transmission lines from the National Transmission Corporation
(Transco).

ERC hearing officer Roviel Masigan presided over the jurisdictional
hearing Thursday for the Lease-Purchase Agreement between the National
Transmission Commission (Transco) and the Bukidnon Sub-transmission
Corporation, a consortium between the First Bukidnon Electric
Cooperative (Fibeco) and the Bukidnon Second Electric Cooperative
(Buseco).

Renato Cortezano, Fibeco general manager said the hearing served as
“expository presentation, pre-trial conference, and evidentiary
hearing” for BSTC’s application to buy the three Transco 69 kilo volt
(kv) sub-transmission lines in Bukidnon.

The assets were named as the Tagoloan (Natumulan) 69 kV line (P14.39
million), Kibawe to Maramag to Aglayan 69 kV line (P44.06 million),
and the Maramag – Pulangi lateral line (P954,259).

Cortezano told Bukidnon News the consortium eyes to protect Bukidnon
electric power consumers from possible skyrocketing of rates if they
will allow private power firms from outside the province to take
control of sub-transmission lines.

But he admitted that there is no guarantee that the cost of
transmission, which is 30 percent of total power bill, will not go up
even with the consortium’s control of sub-transmission lines.

Transco and the consortium filed the application to buy the P59.4
million worth of sub-transmission assets from Transco covered by a
Lease-Purchase Agreement filed before the ERC on September 20, 2011,
according to the presentation by Transco in the hearing.

Republic Act 9136 or the Electric Power Industry Reform Act (EPIRA)
has provided in Section 8 that Transco shall transfer its
sub-transmission assets (STAs) and facilities to qualified
distribution utilities.

This provision, according to Transco, enables them and the NGCP “to
focus their resources and efforts on improving transmission grid” and
“to save maintenance and operating costs.” But Transco added in the
presentation that the BSTC will take charge of the operation,
maintenance, upgrade and expansion of the sub-transmission assets.

In the hearing, attended by big load users and other stakeholders
mostly officials, employees and members of Fibeco and Buseco, Transco
and BSTC officials presented their application documents to the ERC
team headed by Masigan.

Transco presented that the identified assets met the ERC criteria for
sub-transmission assets, that BSTC meets the technical criteria
required under ERC guidelines, and that Transco management waiver on
Electric Cooperatives’ Compliance to financial ratios based on ERC
Resolution No. 1 series of 2009.

Transco has also certified that the proposed sale satisfies all
requirements and criteria set by the Epira, its IRR, as well as ERC
and Transco guidelines.

According to Transco’s presentation, a copy of which was obtained from
Fibeco, upon ERC’s approval of the sale and upon BSTC’s full payment
of the contract price, the parties will execute a deed of absolute
sale.

Cortezano said both electric cooperatives obtained loans of P30
million each to pay the assets. The amortization of the loans, he
added, would be taken from BSTC’s collection of the sub-transmission
cost from consumers, a task previously owned by Transco.
He said aside from a clarification from a member of the Buseco board,
no direct opposition has been aired out during the hearing.

But Oliver Aldovino, Buseco director clarified to this reporter that
his question on the legality of the two non-stock, non-profit
cooperatives to operate a stock corporation is an opposition.

He said Buseco’s by-laws, for example, provided in Article 7 that it
should pursue a non-profit operation and in Article 11 that it can
become a member of any other cooperative or corporation organized to
further the cause of rural electrification.

But he said the by-laws provide that it should be a firm on a
“non-profit basis”.

“The BSTC as a corporation cannot be non-profit,” Aldovino added. He
cited as questionable the organization of the Bukidnon Electric
Consumers Foundation (Beco) as a tandem to the consortium.

He clarified, however, that he is not against the operation of the
BSTC but it has to be done legally, by amending the by-laws if it must
be done.  He added that aside from the P59.4 million loans for the
purchase, the consortium has to source out funds for the
interconnection of the sub-transmission lines servicing the two firm’s
present consumers.

Cortezano said they need to interconnect to improve reliability of
power connection.

But Cortezano denied Aldovino’s claim saying BSTC will not take profit
as the reason why they want to be a player in the sub-transmission
business is to protect the consumers.
ERC’s Masigan asked Aldovino to submit a written manifestation of his
position not later than 20 days after the hearing.

Aside from sub-transmission business, Fibeco, has also proposed the
construction of the Pulangi V hydroelectric power plant in southern
Bukidnon and North Cotabato (Walter I. Balane/Bukidnon News)

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